Melbourne

Victorian hotel market records another strong year

2012-12-04T06:00:00Z

The Victorian hotel investment market has recorded the second highest transactional volume on record. A total of $199 million of hotels throughout Victoria have transacted for the year-to-date behind the peak last year.

Melbourne hotels dominated transaction activity with major hotel transactions including the 273 room Hotel Enterprize which sold to a private Singaporean group for $23 million, the 186 room Melbourne Marriott (as part of the Marriott Portfolio), the 340 room 4.5 star Rendezvous Melbourne which sold to Singaporean-based The Straits Trading and the 211 room 4.5 star Novotel St Kilda that was acquired by the Barana Group for circa $50 million.

Managing Director, Investment Sales – Australasia, Jones Lang LaSalle Hotels said, “These transactions contributed to the overall national hotel transaction volume which also reached the second highest on record at $1.4 billion behind the previous peak in 2007.” He added, “This remarkable level of activity was driven by two national record-breaking deals being the Marriott Portfolio and Shangri-La Hotel Sydney.”

In June, Colonial First State’s Marriott Portfolio which consisted of a total of 1,016 rooms across three five star CBD hotels in Sydney, Melbourne and Brisbane, sold to Bursa Malaysia listed Starhill REIT. This represented the largest hotel transaction by total value to ever occur in Australia at $415 million and the Sydney Harbour Marriott was the largest asset in the portfolio with 563 guest rooms.

In the same month, Australia’s largest single asset hotel transaction occurred when the five star Shangri-La Hotel Sydney sold to its existing Hong Kong based hotel operator Shangri-La Hotels & Resorts for $330 million.With regard to Melbourne, Mr Durran noted, “The latest trading data shows Melbourne occupancy at 81.1% and the average daily room rate at $188. Investors are attracted to Melbourne’s solid trading fundamentals driven by its comprehensive year-long calendar of events and ongoing corporate demand together with a very limited new room supply.”

There are only circa 175 hotel rooms currently under construction and due to open next year at the Sheraton Melbourne development. “These reasons combined with the heightened positive investor sentiment lead us to believe that 2013 will be another successful year,” Mr Durran concluded.​